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Chapter 1

CHAPTER 1-S.F.No. 11
An act relating to education; appropriating money for
education and related purposes to the higher education
services office, board of trustees of the Minnesota
state colleges and universities, board of regents of
the University of Minnesota, and the Mayo Medical
Foundation, with certain conditions; establishing an
account in the state enterprise fund; authorizing
appropriations from the medical education endowment
fund; modifying state appropriations for certain
enrollments; extending expiration deadline for certain
advisory groups; adjusting assigned family
responsibility; modifying grant provisions;
establishing a grant program; authorizing acquisition
of certain facilities by the board of trustees;
providing for refund of tuition for certain students;
making various clarifying and technical changes;
deleting obsolete references; establishing a
developmental education demonstration project;
establishing a commission on University of Minnesota
excellence; requiring reports; amending Minnesota
Statutes 2000, sections 13.322, subdivision 3; 16A.87;
62J.694, subdivisions 1, 2, by adding a subdivision;
135A.031, subdivision 2; 136A.031, by adding a
subdivision; 136A.101, subdivisions 5a, 8; 136A.121,
subdivisions 6, 9; 136A.125, subdivisions 2, 4;
136A.241; 136A.242; 136A.243, subdivisions 1, 2, 3, 4,
9, by adding a subdivision; 136A.244, subdivisions 1,
4; 136A.245, subdivisions 2, 4, by adding
subdivisions; 136F.13, subdivision 1; 136F.60,
subdivision 2; 137.10; 169.966; 299A.45, subdivisions
1, 4; 354.094, subdivision 2; 354.69; 356.24,
subdivision 1; Laws 1986, chapter 398, article 1,
section 18, as amended; proposing coding for new law
in Minnesota Statutes, chapters 16A; 136A; 136F;
repealing Minnesota Statutes 2000, sections 135A.06,
subdivision 1; 136F.13, subdivision 2; Laws 1994,
chapter 643, section 66.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
ARTICLE 1
APPROPRIATIONS
Section 1. [HIGHER EDUCATION APPROPRIATIONS.]
The sums in the columns marked "APPROPRIATIONS" are
appropriated from the general fund, or other named fund, to the
agencies and for the purposes specified in this article. The
listing of an amount under the figure "2002" or "2003" in this
article indicates that the amount is appropriated to be
available for the fiscal year ending June 30, 2002, or June 30,
2003, respectively. "The first year" is fiscal year 2002. "The
second year" is fiscal year 2003. "The biennium" is fiscal
years 2002 and 2003.
SUMMARY BY FUND
2002 2003 TOTAL
General $1,380,039,000 $1,464,114,000 $2,844,153,000
Health Care
Access 2,537,000 2,537,000 5,074,000
SUMMARY BY AGENCY - ALL FUNDS
2002 2003 TOTAL
Higher Education Services Office
148,699,000 157,650,000 306,349,000
Board of Trustees of the Minnesota
State Colleges and Universities
601,583,000 639,984,000 1,241,567,000
Board of Regents of the University
of Minnesota
630,657,000 667,380,000 1,298,037,000
Mayo Medical Foundation
1,637,000 1,637,000 3,274,000
APPROPRIATIONS
Available for the Year
Ending June 30
2002 2003
Sec. 2. HIGHER EDUCATION
SERVICES OFFICE
Subdivision 1. Total
Appropriation $ 148,699,000 $ 157,650,000
The amounts that may be spent from this
appropriation for each purpose are
specified in the following subdivisions.
Notwithstanding Minnesota Statutes,
section 136A.1211, savings in the state
grant program in fiscal years 2002 and
2003 resulting from any increases in
the maximum federal grant from $3,300
up to $3,750 must be used as provided
in this section.
Subd. 2. State Grants 113,668,000 122,598,000
If the appropriation in this
subdivision for either year is
insufficient, the appropriation for the
other year is available for it.
The legislature intends that the higher
education services office make full
grant awards in each year of the
biennium.
For the biennium, the private
institution tuition maximum shall be
$8,764 in the first year and $8,983 in
the second year for four-year
institutions and $6,744 in the first
year and $6,913 in the second year for
two-year institutions.
This appropriation contains money to
set the living and miscellaneous
expense allowance at $5,405 in each
year.
This appropriation contains money to
match scholarship grants made under the
President's Student Service Scholarship
program of the Corporation for National
Service to students attending Minnesota
high schools and who will attend a
Minnesota post-secondary institution.
Not more than one matching grant of
$500 may be made for each high school
per year.
Notwithstanding Minnesota Statutes,
section 136A.1211, savings in the state
grant program in fiscal years 2002 and
2003 resulting from any increase in the
maximum federal grant over $3,750 or
from any other source must be used to
provide additional decreases in the
family responsibility for independent
students up to an additional ten
percent from the decrease in this bill
and to increase funding for work study
programs.
Subd. 3. Interstate Tuition
Reciprocity 5,250,000 5,250,000
If the appropriation in this
subdivision for either year is
insufficient, the appropriation for the
other year is available to meet
reciprocity contract obligations.
The higher education services office
must negotiate the reciprocity
agreements for remission of nonresident
tuition under Minnesota Statutes,
section 136A.08. The agreements must
be negotiated under this subdivision
with the goal of reducing and
minimizing the obligation of
participating states to make general
fund transfers for the tuition
reciprocity program while maintaining
access for Minnesota students.
Negotiations must include consideration
of new methods of collaboration with
education institutions in reciprocity
states to improve student access at
lower costs, including on-line
learning. The chancellor of the
Minnesota state colleges and
universities and the president of the
University of Minnesota or their
designees may participate in any
negotiations on the tuition reciprocity
agreement. The higher education
services office must present progress
on negotiations under this subdivision
to the higher education finance
committees of the 2002 legislature.
Subd. 4. State Work Study
12,444,000 12,444,000
Subd. 5. Minitex and MnLINK
5,868,000 5,868,000
Subd. 6. Learning Network of Minnesota
6,079,000 6,079,000
Subd. 7. Income Contingent Loans
The higher education services office
shall administer an income-contingent
loan repayment program to assist
graduates of Minnesota schools in
medicine, dentistry, pharmacy,
chiropractic medicine, public health,
and veterinary medicine, and Minnesota
residents graduating from optometry and
osteopathy programs. Applicant data
collected by the office for this
program may be disclosed to a consumer
credit reporting agency under the same
conditions as those that apply to the
supplemental loan program under
Minnesota Statutes, section 136A.162.
No new applicants may be accepted after
June 30, 1995.
Subd. 8. Minnesota College Savings Plan
1,520,000 1,520,000
Subd. 9. Agency Administration
3,870,000 3,891,000
This appropriation includes base
funding to foster post-secondary
attendance by providing outreach
services to historically underserved
groups of Minnesota elementary and
secondary students. The office may
retain the entire appropriation or
contract with other agencies or
nonprofit organizations for specific
services in this effort.
This appropriation contains money for
grants to increase campus-community
collaboration and service learning
statewide. For every $1 in state
funding, grant recipients must
contribute $2 in campus or
community-based support. Up to five
percent of the allocation for this
program may be used to develop and
implement a performance-based
accountability system to assess program
outcomes.
This appropriation includes an increase
in the dues for the Midwest Higher
Education Compact.
Any appropriations remaining after
final benefits are paid to youthworks
grantees may be used for college early
intervention programs.
Subd. 10. Balances Forward
A balance in the first year under this
section does not cancel, but is
available for the second year.
Subd. 11. Transfers
The higher education services office
may transfer unencumbered balances from
the appropriations in this section to
the state grant appropriation, the
interstate tuition reciprocity
appropriation, the child care
appropriation, and the state work study
appropriation.
Subd. 12. Reporting
The higher education services office
shall collect data monthly from
institutions disbursing state financial
aid. The data collected shall include,
but is not limited to, expenditures by
type to date and unexpended balances.
The higher education services office
shall evaluate and report on state
financial aid expenditures and
unexpended balances to the chairs of
the higher education finance committees
of the senate and house of
representatives and the commissioner of
finance on February 1, May 1, September
1, and December 1 each year.
Sec. 3. BOARD OF TRUSTEES OF THE
MINNESOTA STATE COLLEGES AND UNIVERSITIES
Subdivision 1. Total
Appropriation 601,583,000 639,984,000
The amounts that may be spent from this
appropriation for each purpose are
specified in the following subdivisions.
The legislature intends that state
appropriations be used to strengthen
and support education of students. To
this end, all money appropriated in
this section, except that in direct
support of system office activities,
shall be allocated by the board
directly to the colleges and
universities.
Subd. 2. Estimated Expenditures and Appropriations
The legislature estimates that
instructional expenditures will be
$795,927,000 in the first year and
$847,873,000 in the second year.
The legislature estimates that
noninstructional expenditures will be
$70,964,000 in the first year and
$74,736,000 in the second year.
The Northeast Higher Education District
shall be the fiscal agent for the
Arrowhead University Center.
This appropriation includes money for a
grant to Minnesota state university,
Mankato, for the Talented Youth
Mathematics Program and to expand the
program in the second year to an
additional region.
During the biennium, neither the board
nor campuses shall plan or develop
doctoral level programs or degrees
until after they have received the
recommendation of the house and senate
committees on education, finance, and
ways and means.
By January 1, 2002, the board must
implement the Minnesota transfer
curriculum at all state colleges and
universities.
Once a course has met the criteria
necessary for inclusion in the
Minnesota transfer curriculum in any
area of emphasis, the course must be
accepted for full credit in that area
of emphasis at all Minnesota state
colleges and universities.
By July 1, 2002, the board must publish
an internet-based student manual that
identifies and describes how general
education courses at two-year MnSCU
institutions transfer to state
universities within the Minnesota state
colleges and universities system.
In each year, the board of trustees
shall increase the percentage of the
total general fund expenditures for
direct instruction and academic
support, as reported in the federal
Integrated Postsecondary Education Data
System (IPEDS). By February 15 of each
year, the board of trustees shall
report to the higher education finance
committees of the legislature the
percentage of total general fund
expenditures spent on direct
instruction and on academic support
during the previous fiscal year by
institution and for the system as a
whole.
During the biennium, technical and
consolidated colleges shall make use of
instructional advisory committees
consisting of employers, students, and
instructors. The instructional
advisory committee shall be consulted
when a technical program is proposed to
be created, modified, or eliminated.
If a decision is made to eliminate a
program, a college shall adequately
notify students and make plans to
assist students affected by the closure.
The board may waive tuition for
eligible Southwest Asia veterans, as
provided in Minnesota Statutes, section
136F.28.
Subd. 3. Accountability
(a) By February 1 of each even-numbered
year, the board must submit a report to
the chairs of the appropriate education
committees of the legislature
describing the following:
(1) how it allocated the state
appropriations made to the system in
the omnibus higher education funding
bill in the odd-numbered year;
(2) the tuition rates and fees set by
the board; and
(3) the amount of state money used to
leverage money from other funding
sources and the level of support from
those sources.
(b) By February 15, 2002, and each
odd-numbered year thereafter, the board
of trustees of the Minnesota state
colleges and universities must submit a
report to the commissioner of finance
and the chairs of the higher education
finance committees delineating:
(1) the five undergraduate degree
programs determined to be of highest
priority to the system, and the revenue
necessary to advance each program to be
a center of excellence;
(2) the reallocation of money and
curricular and staffing changes, by
campus and program, made to advance the
system's priorities;
(3) baseline data, and the methodology
used to measure the number of first
generation students admitted
systemwide, together with a plan to
increase both the recruitment and
retention through graduation of these
students;
(4) progress towards increasing the
percentage of students at four-year
institutions graduating within four,
five, and six years and the percentage
of students at two-year institutions
completing a program or transferring to
a four-year institution, as reported in
IPEDS. Data should be provided for
each institution by race, ethnicity,
and gender. Data provided should
include information on successful
retention strategies and the money
allocated to enhance student retention;
and
(5) progress towards increasing the
revenue generated from contracts with
employers for customized training.
Subd. 4. Base Appropriations
For fiscal years 2002 and 2003, there
is a one-time reduction of $13,500,000
in the base appropriation for the
Minnesota state colleges and
universities.
Subd. 5. Reserves
The board must distribute $5,000,000 of
the balance held in central office
reserves at the end of fiscal year 2001
to campuses in fiscal year 2002 through
a leveraged equipment purchase
program. Participating campuses must
match the money distributed through the
leveraged equipment purchase program at
least dollar for dollar with nonstate
funds.
By December 1, 2002, the board of
trustees must adopt policies to clarify
the purposes of the central reserve and
under what general conditions it will
be used.
Subd. 6. Central Office Services
The board of trustees of the Minnesota
state colleges and universities, in
cooperation with the council of
presidents, must develop a plan to
increase autonomy for campuses and
accountability at the system level.
The plan must include the provision of
central office services in ways that
better reflect campus needs. The plan
must consider the following:
(1) core central office services funded
through a nominal fee paid by all
campuses;
(2) an option for campuses to contract
for services from the central office;
(3) the streamlined delivery of
services to eliminate duplication at
the campus and central office;
(4) the impact of alternative service
delivery methods on various types of
campuses; and
(5) making central office services more
market-sensitive.
The board must present a plan to
restructure central office services to
the chairs of the higher education
finance committees of the legislature
by February 15, 2003.
Sec. 4. BOARD OF REGENTS OF THE
UNIVERSITY OF MINNESOTA
Subdivision 1. Total
Appropriation 630,657,000 667,380,000
The amounts that may be spent from this
appropriation for each purpose are
specified in the following subdivisions.
Subd. 2. Operations and
Maintenance 554,211,000 590,934,000
Estimated Expenditures
and Appropriations
The legislature estimates that
instructional expenditures will be
$485,793,000 in the first year and
$522,184,000 in the second year.
The legislature estimates that
noninstructional expenditures will be
$230,349,000 in the first year and
$242,812,000 in the second year.
Subd. 3. Health Care Access Fund 2,537,000 2,537,000
This appropriation is from the health
care access fund for primary care
education initiatives.
Subd. 4. Special
Appropriation 73,909,000 73,909,000
The amounts expended for each program
in the four categories of special
appropriations shall be stated in the
2003 biennial budget document.
(a) Agriculture and Extension Service
58,838,000 58,838,000
This appropriation is for the
Agricultural Experiment Station,
Minnesota Extension Service.
The university must continue to provide
support for the rapid agricultural
response fund, and sustainable and
organic agriculture initiatives
including, but not limited to, the
alternative swine systems program.
Any salary increases granted by the
University to personnel paid from the
Minnesota Extension appropriation must
not result in a reduction of the county
responsibility for the salary payments.
During the biennium, the University
shall maintain an advisory council
system for each experiment station.
The advisory councils must be broadly
representative of the range in size and
income distribution of farms and
agribusinesses and must not
disproportionately represent those from
the upper half of the size and income
distributions.
The board of regents of the University
of Minnesota is requested to review and
analyze the programmatic mission,
scope, and cost-effectiveness of the
Minnesota Extension Service with the
goal of assuring that the Minnesota
Extension Service offers programs and
services effectively and efficiently
and within the scope of its current
defined mission. The board is
requested to report, by February 15,
2002, to the governor and the chairs of
the higher education finance committees
of the legislature with recommendations
for priorities in the extension service.
(b) Health Sciences
5,846,000 5,846,000
This appropriation is for the rural
physicians associates program, the
Veterinary Diagnostic Laboratory,
health sciences research, dental care,
and the Biomedical Engineering Center.
(c) Institute of Technology
1,645,000 1,645,000
This appropriation is for the
Geological Survey and the Talented
Youth Mathematics Program.
(d) System Specials
7,580,000 7,580,000
This appropriation is for general
research, student loans matching money,
industrial relations education, Natural
Resources Research Institute, Center
for Urban and Regional Affairs, Bell
Museum of Natural History, and the
Humphrey exhibit.
This appropriation contains money for
an increase in each year for the
Natural Resources Research Institute.
Subd. 5. Accountability
(a) By February 1 of each even-numbered
year, the board must submit a report to
the chairs of the appropriate education
committees of the legislature
describing the following:
(1) how it allocated the state
appropriations made to the system in
the omnibus higher education funding
bill in the odd-numbered year;
(2) the tuition rates and fees set by
the board; and
(3) the amount of state money used to
leverage money from other funding
sources and the level of support from
those sources.
(b) By February 15, 2002, and each
odd-numbered year thereafter, the board
of regents of the University of
Minnesota must submit a report to the
commissioner of finance and the chairs
of the higher education finance
committees delineating:
(1) the five undergraduate degree
programs determined to be of highest
priority to the system, and the revenue
necessary to advance each program to be
a center of excellence;
(2) the reallocation of money and
curricular and staffing changes, by
campus and program, made to advance the
system's priorities;
(3) baseline data, and the methodology
used to measure, the number of first
generation students admitted
systemwide, together with a plan to
increase both the recruitment and
retention through graduation of these
students;
(4) progress towards increasing the
percentage of students graduating
within four, five, and six years as
reported in IPEDS. Data should be
provided for each institution by race,
ethnicity, and gender. Data provided
should include information on
successful retention strategies and the
money allocated to enhance student
retention;
(5) progress towards increasing the
revenue received, from all sources, to
support research activities. Data
provided should include information on
the increase in funding from each
source; and
(6) progress of the academic health
center in meeting the goals and
outcomes in paragraph (c) including how
money appropriated from the medical
endowment fund contributed to meeting
specific workforce training and health
education goals for the academic health
center.
(c) The Academic Health Center, in
cooperation with the department of
health, shall:
(1) develop new strategies for health
care delivery and professional training
in this state that takes into account
the changing racial and ethnic
composition of this state;
(2) develop new strategies to meet the
health care workforce needs in the
state; and
(3) base these strategies on analysis
of the population's health status and
opportunities for its improvement.
Sec. 5. MAYO MEDICAL FOUNDATION
Subdivision 1. Total
Appropriation 1,637,000 1,637,000
The amounts that may be spent from this
appropriation for each purpose are
specified in the following subdivisions.
Subd. 2. Medical School
605,000 605,000
The state of Minnesota must pay a
capitation of $14,405 each year for
each student who is a resident of
Minnesota. The appropriation may be
transferred between years of the
biennium to accommodate enrollment
fluctuations.
The legislature intends that during the
biennium the Mayo foundation use the
capitation money to increase the number
of doctors practicing in rural areas in
need of doctors.
Subd. 3. Family Practice and
Graduate Residency Program
625,000 625,000
The state of Minnesota must pay a
capitation of $22,313 for 26 residents
each year and $44,627 for one resident
each year.
Subd. 4. St. Cloud Hospital-Mayo
Family Practice Residency Program
407,000 407,000
This appropriation is to the Mayo
foundation to support 12 resident
physicians each year in the St. Cloud
Hospital-Mayo Family Practice Residency
program. The program shall prepare
doctors to practice primary care
medicine in the rural areas of the
state. It is intended that this
program will improve health care in
rural communities, provide affordable
access to appropriate medical care, and
manage the treatment of patients in a
more cost-effective manner.
Sec. 6. POST-SECONDARY SYSTEMS
Subdivision 1. Post-Secondary Planning Report
By February 15 of each year the board
of trustees of the Minnesota state
colleges and universities must and the
board of regents of the University of
Minnesota is requested to report to the
legislature on progress under the
master academic plan for the
metropolitan area. The report must
include a discussion of coordination
and duplication of program offerings,
developmental and remedial education,
credit transfers within and between the
post-secondary systems, and planning
and delivery of coordinated programs.
In order to better achieve the goal of
a more integrated, effective, and
seamless post-secondary education
system in Minnesota, the report must
also identify statewide efforts at
integration and cooperation between the
post-secondary systems.
ARTICLE 2
RELATED PROVISIONS
Section 1. [16A.532] [MINNESOTA STATE COLLEGES AND
UNIVERSITIES ENTERPRISE ACCOUNT.]
There is created in the state enterprise fund a Minnesotastate colleges and universities account. The commissioner mustreport to committees of the legislature having jurisdiction overthe account on activity in this account at the same time fundbalance statements are issued for the general fund. The amountsin this account earn investment income as provided in section136F.71, subdivision 3.
Sec. 2. Minnesota Statutes 2000, section 16A.87, is
amended to read:
16A.87 [TOBACCO SETTLEMENT FUND.]
Subdivision 1. [ESTABLISHMENT; PURPOSE.] The tobacco
settlement fund is established as a clearing account in the
state treasury.
Subd. 2. [DEPOSIT OF MONEY.] The commissioner shall credit
to the tobacco settlement fund the tobacco settlement payments
received by the state on September 5, 1998, January 4, 1999,
January 3, 2000, and January 2, 2001, January 2, 2002, andJanuary 2, 2003, as a result of the settlement of the lawsuit
styled as State v. Philip Morris Inc., No. C1-94-8565 (Minnesota
District Court, Second Judicial District).
Subd. 3. [APPROPRIATION.] (a) Of the amounts credited to
the fund prior to January 2, 2002, 61 percent is appropriated
for transfer to the tobacco use prevention and local public
health endowment fund created in section 144.395 and 39 percent
is appropriated for transfer to the medical education endowment
fund created in section 62J.694.
(b) The entire amount credited to the fund from the paymentmade on January 2, 2002, and January 2, 2003, is appropriatedfor transfer to the academic health center account under section62J.694, subdivision 1, paragraph (b), in the medical educationendowment fund created under section 62J.694, subdivision 1.
Subd. 4. [SUNSET.] The tobacco settlement fund expires
June 30, 20152004.
Sec. 3. Minnesota Statutes 2000, section 62J.694,
subdivision 1, is amended to read:
Subdivision 1. [CREATION.] (a) The medical education
endowment fund is created in the state treasury. The state
board of investment shall invest the fund under section 11A.24.
All earnings of the fund must be credited to the fund. The
principal of the fund must be maintained inviolate, except that
the principal may be used to make expenditures from the fund for
the purposes specified in this section when the market value of
the fund falls below 105 percent of the cumulative total of the
tobacco settlement payments received by the state and credited
to the tobacco settlement fund under section 16A.87, subdivision
2. For purposes of this section, "principal" means an amount
equal to the cumulative total of the tobacco settlement payments
received by the state and credited to the tobacco settlement
fund under section 16A.87, subdivision 2.
(b) The academic health center account is created as aseparate account in the medical education endowment fund. Theaccount is invested under paragraph (a). All earnings of theaccount must be credited to the account. The principal of theaccount must be maintained inviolate, except that the principalmay be used to make expenditures from the account for thepurposes specified in subdivision 2a when the value of theaccount falls below an amount equal to deposits made to theaccount under section 16A.87, subdivision 3, paragraph (b).
Sec. 4. Minnesota Statutes 2000, section 62J.694,
subdivision 2, is amended to read:
Subd. 2. [EXPENDITURES.] (a) Up to five percent of the
fair market value of the fund excluding the value of theacademic health center account, is annually appropriated for
medical education activities in the state of Minnesota. The
appropriations are to be transferred quarterly for the purposes
identified in the following paragraphs.
(b) For fiscal year 2000, 70 percent of the appropriation
in paragraph (a) is for transfer to the board of regents for the
instructional costs of health professional programs at the
academic health center and affiliated teaching institutions, and
30 percent of the appropriation is for transfer to the
commissioner of health to be distributed for medical education
under section 62J.692.
(c) For fiscal year 2001, 49 percent of the appropriation
in paragraph (a) is for transfer to the board of regents for the
instructional costs of health professional programs at the
academic health center and affiliated teaching institutions, and
51 percent is for transfer to the commissioner of health to be
distributed for medical education under section 62J.692.
(d) For fiscal year 2002, and each year thereafter, 42
percent of the appropriation in paragraph (a) may beis
appropriated by another law for the instructional costs of
health professional programs at publicly fundedthe Universityof Minnesota academic health centers and affiliated teachinginstitutionscenter, and 58 percent is for transfer to the
commissioner of health to be distributed for medical education
under section 62J.692.
(e) A maximum of $150,000 of each annual appropriation to
the commissioner of health in paragraph (d) may be used by the
commissioner for administrative expenses associated with
implementing section 62J.692.
Sec. 5. Minnesota Statutes 2000, section 62J.694, is
amended by adding a subdivision to read:
Subd. 2a. [EXPENDITURE; ACADEMIC HEALTH CENTER
ACCOUNT.] Beginning in January 2002, up to five percent of thefair market value of the academic health center account isannually appropriated to the board of regents for the costs ofthe academic health center. Appropriations are to betransferred quarterly and may only be used for instructionalcosts of health professional programs at the academic healthcenter and for interdisciplinary academic initiatives within theacademic health center.
Sec. 6. Minnesota Statutes 2000, section 135A.031,
subdivision 2, is amended to read:
Subd. 2. [APPROPRIATIONS FOR CERTAIN ENROLLMENTS.] The
state share of the estimated expenditures for instruction shall
vary for some categories of students, as designated in this
subdivision.
(a) The state must provide at least 67 percent of the
estimated expenditures for:
(1) students who resided in the state for at least one
calendar year prior to applying for admission or dependent
students whose parent or legal guardian resides in Minnesota at
the time the student applies;
(2) Minnesota residents who can demonstrate that they were
temporarily absent from the state without establishing residency
elsewhere;
(3) residents of other states or provinces who are
attending a Minnesota institution under a tuition reciprocity
agreement; and
(4) students who have been in Minnesota as migrant
farmworkers, as defined in the Code of Federal Regulations,
title 20, section 633.104, over a period of at least two years
immediately before admission or readmission to a Minnesota
public post-secondary institution, or students who are
dependents of such migrant farmworkers; and(5) persons who: (i) were employed full time and wererelocated to the state by the person's current employer, or (ii)moved to the state for employment purposes and, before movingand before applying for admission to a public post-secondaryinstitution, accepted a job in the state, or students who arespouses or dependents of such persons.
(b) The definition of full year equivalent for purposes of
the formula calculations in this chapter is twice the normal
value for the following enrollments:
(1) students who are concurrently enrolled in a public
secondary school and for whom the institution is receiving any
compensation under the Post-Secondary Enrollment Options Act;
and
(2) students enrolled under the student exchange program of
the Midwest Compact.
(c) The state may not provide any of the estimatedexpenditures for undergraduate students (1) who do not meet theresidency criteria under paragraph (a), or (2) who havecompleted, without receiving a baccalaureate degree, 48 or morequarter credits or the equivalent, applicable toward the degree,beyond the number required for a baccalaureate in their major.Credits for courses in which a student received a grade of "F"or "W" shall be counted toward this maximum, as if the creditshad been earned.
Sec. 7. Minnesota Statutes 2000, section 136A.031, is
amended by adding a subdivision to read:
Subd. 5. [EXPIRATION.] Notwithstanding section 15.059,subdivision 5a, the advisory groups established in this sectionexpire on June 30, 2003.
Sec. 8. Minnesota Statutes 2000, section 136A.101,
subdivision 5a, is amended to read:
Subd. 5a. [ASSIGNED FAMILY RESPONSIBILITY.] "Assigned
family responsibility" means the amount of a family contribution
to a student's cost of attendance, as determined by a federal
need analysis, except that, beginning for the 1998-1999 academic
year, up to $25,000 in savings and other assets shall be
subtracted from the federal calculation of net worth before
determining the contribution. For dependent students, the
assigned family responsibility is the parental contribution.
For independent students with dependents other than a spouse,
the assigned family responsibility is the student contribution.
For independent students without dependents other than a spouse,
the assigned family responsibility is 80 percent of the student
contribution. Beginning in fiscal year 2002, the assignedfamily responsibility for all independent students is reduced anadditional ten percent.
Sec. 9. Minnesota Statutes 2000, section 136A.101,
subdivision 8, is amended to read:
Subd. 8. [RESIDENT STUDENT.] "Resident student" means a
student who meets one of the following conditions:
(1) an independenta student who has resided in Minnesota
for purposes other than post-secondary education for at least 12
months without being enrolled at a post-secondary educational
institution for more than five credits in any term;
(2) a dependent student whose parent or legal guardian
resides in Minnesota at the time the student applies;
(3) a student who graduated from a Minnesota high school,
if the student was a resident of Minnesota during the student's
period of attendance at the Minnesota high school; or
(4) a student who, after residing in the state for a
minimum of one year, earned a high school equivalency
certificate in Minnesota.
Sec. 10. Minnesota Statutes 2000, section 136A.121,
subdivision 6, is amended to read:
Subd. 6. [COST OF ATTENDANCE.] (a) The recognized cost of
attendance consists of allowances specified in law for room andboardliving and miscellaneous expenses, and
(1) for public institutions, the actual tuition and fees
charged by the institution; or
(2) for private institutions, an allowance for tuition and
fees equal to the lesser of the actual tuition and fees charged
by the institution, or the private institution tuition and fee
maximums established in law.
(b) For the purpose of paragraph (a), clause (2), the
private institution tuition and fee maximum for two- and
four-year, private, residential, liberal arts, degree-granting
colleges and universities must be the same.
(c) For a student attendingregistering for less than full
time, the office shall prorate the recognized cost of attendanceliving and miscellaneous expense allowance to the actual number
of credits for which the student is enrolled.
The recognized cost of attendance for a student who is
confined to a Minnesota correctional institution shall consist
of the tuition and fee component in paragraph (a), clause (1) or
(2), with no allowance for living and miscellaneous expenses.
Sec. 11. Minnesota Statutes 2000, section 136A.121,
subdivision 9, is amended to read:
Subd. 9. [AWARDS.] An undergraduate student who meets the
office's requirements is eligible to apply for and receive a
grant in any year of undergraduate study unless the student has
obtained a baccalaureate degree or previously has been enrolled
full time or the equivalent for eightten semesters or 12quartersthe equivalent, excluding courses taken from a
Minnesota school or post-secondary institution which is not
participating in the state grant program and from which a
student transferred no credit.
Sec. 12. [136A.124] [ADVANCED PLACEMENT AND INTERNATIONAL
BACCALAUREATE GRANT.]
Subdivision 1. [ESTABLISHMENT.] Appropriations for thissection must be used by the office for grants to encourageMinnesota students participating in advanced placement andinternational baccalaureate programs to attend a college oruniversity in Minnesota. For enrollment beginning in the fallof 2002, the grants must be awarded to students who apply forthe grant, are eligible under subdivision 2, and who enroll inan eligible institution as defined in subdivision 2 during theyear following high school graduation. An institution, onbehalf of the student, must request payment of the grant fromthe higher education services office. The grant may be usedonly for the costs of the actual tuition, required fees, andbooks in nonsectarian courses or programs. A grant under thissection may be made for a maximum of two years.Subd. 2. [ELIGIBILITY.] A grant must be awarded to astudent scoring an average of three or higher on five or moreadvanced placement examinations on full-year courses or anaverage of four or higher on five or more internationalbaccalaureate examinations on full-year courses. The annualamount of each grant must be based on the student's scores onthe examinations and the funds available under this section.A grant under this subdivision must not affect arecipient's eligibility for a state grant under section 136A.121.Subd. 3. [ALLOCATION OF FUNDS.] The office, inconsultation with representatives of the advanced placement andinternational baccalaureate programs selected by the advancedplacement advisory council, international baccalaureate ofMinnesota (IBMN), and the department of children, families, andlearning must allocate the available funds fairly between theadvanced placement and international baccalaureate programs.Subd. 4. [ELIGIBLE INSTITUTION.] An "eligible institution"under this section is a public or private four-yeardegree-granting college or university or a two-year publiccollege in Minnesota that has a credit and placement policy foreither advanced placement or international baccalaureatescholarship recipients, or both. Each eligible institution mustannually certify its policies to the office. The office mustprovide each Minnesota secondary school with a copy of thepost-secondary advanced placement and internationalbaccalaureate policies of eligible institutions.
Sec. 13. Minnesota Statutes 2000, section 136A.125,
subdivision 2, is amended to read:
Subd. 2. [ELIGIBLE STUDENTS.] An applicant is eligible for
a child care grant if the applicant:
(1) is a resident of the state of Minnesota;
(2) has a child 12 years of age or younger, or 14 years of
age or younger who is handicapped as defined in section 125A.02,
and who is receiving or will receive care on a regular basis
from a licensed or legal, nonlicensed caregiver;
(3) is income eligible as determined by the office's
policies and rules, but is not a recipient of assistance from
the Minnesota family investment program;
(4) has not earned a baccalaureate degree and has been
enrolled full time less than eightten semesters, 12 quarters,
or the equivalent;
(5) is pursuing a nonsectarian program or course of study
that applies to an undergraduate degree, diploma, or
certificate;
(6) is enrolled at least half time in an eligible
institution; and
(7) is in good academic standing and making satisfactory
academic progress.
Sec. 14. Minnesota Statutes 2000, section 136A.125,
subdivision 4, is amended to read:
Subd. 4. [AMOUNT AND LENGTH OF GRANTS.] The amount of a
child care grant must be based on:
(1) the income of the applicant and the applicant's spouse,if any;
(2) the number in the applicant's family, as defined by the
office; and
(3) the number of eligible children in the applicant's
family.
The maximum award to the applicant shall be $2,000$2,600
for each eligible child per academic year, except that the
campus financial aid officer may apply to the office for
approval to increase grants by up to ten percent to compensate
for higher market charges for infant care in a community. The
office shall develop policies to determine community market
costs and review institutional requests for compensatory grant
increases to ensure need and equal treatment. The office shall
prepare a chart to show the amount of a grant that will be
awarded per child based on the factors in this subdivision. The
chart shall include a range of income and family size.
Sec. 15. Minnesota Statutes 2000, section 136F.13,
subdivision 1, is amended to read:
Subdivision 1. [OPERATION.] The state university board
shall operate an educational program for a state university
center as organized in the seven county metropolitan area. The
center may operate in facilities acquired through the
commissioner of administration by gift or lease. The faculty
and staff of the state university system shall provide
assistance in developing curricular and educational programs for
the university.
Sec. 16. Minnesota Statutes 2000, section 136F.60,
subdivision 2, is amended to read:
Subd. 2. [METHODS OF ACQUISITION AND REAL PROPERTY
TRANSACTIONS.] (a) If money has been appropriated to the board
to acquire lands or sites for public buildings or real estate,
the acquisition may be by gift, purchase, or condemnation
proceedings. Condemnation proceedings must be under chapter 117.
(b) The board may accept gifts to improve or acquirefacilities as provided in this paragraph:(1) for remodeling existing facilities if the remodelingdoes not materially increase the square footage of the facility;(2) for the acquisition, construction, or remodeling costsof facilities for which state capital appropriations have beenmade and whose use will not be substantially changed; or(3) for capital projects not authorized by the legislatureif the board first certifies that project revenues, other giftsor grants, or other sources of capital funds are available forproject costs and that no tuition revenues or state or federalappropriations are used for the capital or operating costs,including all program costs, salaries, and benefits, of thefacility.(c) The board may convey or lease real property under theboard's control, with or without monetary consideration, toprovide a facility for the primary benefit of a state college oruniversity or its students if the board certifies that projectrevenues, other gifts or grants, or other sources of funds areavailable for project costs and that no tuition revenues orstate or federal appropriations are used for the capital cost ofthe facility. Agreements under this paragraph must demonstrateto the board's satisfaction the financial viability of theproposed project, including all proposed financial andcontractual obligations, and operating costs, including allprogram costs, salaries and benefits, and other costs reasonablyexpected to be incurred or binding upon the college oruniversity. Siting and design of the facility must beconsistent with the campus master plan and Minnesota statecolleges and universities building standards. Agreements underthis paragraph to convey, or to lease for a term not to exceed30 years, subject to section 16A.695, may be made followingrequests for proposal or by direct negotiation. Conveyances bythe board under this paragraph must be by quitclaim deed in aform approved by the attorney general. Land conveyed by theboard must revert to the state if it is no longer used for theprimary benefit of a state college or university or its students.(d) For purposes of this subdivision, "facility" includesstudent unions, recreational centers and athletic centers, orfacilities for which state capital appropriations have been madeand the use of which will not be substantially changed."Facility" also includes self-supporting student housing.(e) The board must report in a timely manner to the chairsof the house and senate committees with jurisdiction over highereducation finance, capital investment, and ways and means anycapital project under paragraphs (b) or (c) with a cost of$3,000,000 or more.
Sec. 17. [136F.701] [REFUND OF TUITION.]
(a) Any student who is a resident of the state, hasenrolled in the state colleges and universities and paid tuitionfor the course, and who, prior to the termination of the schoolyear for which the tuition was paid, enlisted or has beeninducted into the military service of the United States, eithervoluntarily or pursuant to the present selective service law, isentitled to the refund of all tuition paid for which creditcannot properly be given.(b) The administrative officers of the state colleges anduniversities shall refund to the students any tuition so paid.Any student making application for refund of any paid tuitionmust furnish to the administrative officers of the statecolleges and universities a certificate from the proper officersreciting the fact of the enlistment or the induction of thestudent into the military service of the United States.
Sec. 18. Minnesota Statutes 2000, section 137.10, is
amended to read:
137.10 [REFUND OF TUITION TO STUDENTS IN CERTAIN CASES.]
Any student who, being a resident of the state, has
enrolled to pursue any course in the University of Minnesota orany state university and paid tuition for the course, and who,
prior to the termination of the school year for which the
tuition was paid, enlisted or has been inducted into the
military services of the United States, either voluntarily or
pursuant to the present selective service law, is entitled to
the refund of all tuition paid for which credit cannot properly
be given.
The administrative officers of the University of Minnesota
and of the universities or institutions shall refund to the
students any tuition so paid. Any student making application
for refund of any paid tuition shall furnish to the
administrative officers of the University of Minnesota or of theuniversities a certificate from the proper officers reciting the
fact of the enlistment or the induction of the student into the
military service of the United States.
Sec. 19. Minnesota Statutes 2000, section 169.966, is
amended to read:
169.966 [STATE UNIVERSITY BOARD TO REGULATE TRAFFIC.]
Subdivision 1. [AUTHORITY.] The state university board oftrustees of the Minnesota state colleges and universities may
from time to time make, adopt, and enforce such rules or
ordinances not inconsistent with this chapter, as it may find
expedient or necessary relating to the regulation of traffic and
parking upon parking facilities and private roads and roadways
situated on property owned, leased, occupied or operated by
state universities.
Subd. 1a. [PARKING FACILITIES.] The state university board
of trustees may establish rents, charges or fees for the use of
parking facilities owned, leased, occupied, or operated by the
state university board. The money collected by the board as
rents, charges or fees in accordance with this subdivision shall
be deposited in the university activity fund and is annually
appropriated to the state university board of trustees for state
university purposes and to maintain and operate parking lots and
parking facilities.
Subd. 2. [PETTY MISDEMEANOR.] Any person violating such
rule or ordinance shall be guilty of a petty misdemeanor and
subject to the provisions of sections 169.891 and 169.90,
subdivision 1.
Subd. 3. [PROSECUTION.] The prosecution may be before a
district court having jurisdiction over the place where the
violation occurs.
Subd. 4. [ENFORCEMENT.] Every sheriff, constable, police
officer, or other peace officer shall see that all rules and
ordinances are obeyed and shall arrest and prosecute offenders.
Subd. 5. [ENFORCEMENT POWERS.] The state university
board of trustees may appoint and employ, and fix the
compensation to be paid out of funds which may be available for
such purposes, persons who shall have and may exercise on
property owned, leased, or occupied by the state universities
the same powers of arrest for violation of rules or ordinances
adopted by the board as possessed by a sheriff, constable,
police officer, or peace officer.
Subd. 6. [JUDICIAL NOTICE.] All persons shall take notice
of such rules and ordinances without pleading and proof of the
same.
Subd. 7. [NOTICE, HEARING, FILING, AND EFFECT.] (a)
The state university board of trustees shall fix a date for a
public hearing on the adoption of any such proposed rule or
ordinance. Notice of such hearing shall be published in a legal
newspaper in the county in which the property affected by the
rule or ordinance is located. The publication shall be at least
15 days and not more than 45 days before the date of the hearing.
(b) If, after the public hearing, the proposed rule or
ordinance shall be adopted by a majority of the members of the
board, the same shall be considered to have been enacted by the
board. A copy of the same shall be signed by the president and
filed with the county recorder of each county where the rule or
ordinance shall be in effect, together with proof of
publication. Upon such filing, the rule or ordinance, as the
case may be, shall thenceforth be in full force and effect.
Subd. 8. [DELEGATION.] The state university board oftrustees may delegate its responsibilities under this section to
a state university president. Actions of the president shall be
presumed to be those of the board. The university president
shall file with the board president the results of any public
hearings and the subsequent adoption of any proposed rule or
ordinance enacted pursuant thereto.
Sec. 20. Minnesota Statutes 2000, section 299A.45,
subdivision 1, is amended to read:
Subdivision 1. [ELIGIBILITY.] Following certification
under section 299A.44 and compliance with this section and rules
of the commissioner of public safety and the higher education
services office, dependent children less than 23 years of age
and the surviving spouse of a public safety officer killed in
the line of duty on or after January 1, 1973, are eligible to
receive educational benefits under this section. To qualify for
an award, they must be enrolled in undergraduate degree or
certificate programs after June 30, 1990, at an eligible
Minnesota institution as provided in section 136A.101,
subdivision 4. Persons who have received a baccalaureate degree
or have been enrolled full time or the equivalent of eightten
semesters or 12 quartersthe equivalent, whichever occurs first,
are no longer eligible.
Sec. 21. Minnesota Statutes 2000, section 299A.45,
subdivision 4, is amended to read:
Subd. 4. [RENEWAL.] Each award must be given for one
academic year and is renewable for a maximum of sixeight
semesters or nine quarters or theirthe equivalent. An award
must not be given to a dependent child who is 23 years of age or
older on the first day of the academic year.
Sec. 22. Minnesota Statutes 2000, section 354.094,
subdivision 2, is amended to read:
Subd. 2. [MEMBERSHIP; RETENTION.] Notwithstanding section
354.49, subdivision 4, clause (3), a member on extended leave
whose employee and employer contributions are paid into the fund
pursuant to subdivision 1 shall retain membership in the
association for as long as the contributions are paid, under the
same terms and conditions as if the member had continued to
teach in the district, the community college system, or the
Minnesota state universitycolleges and universities system.
Sec. 23. Minnesota Statutes 2000, section 354.69, is
amended to read:
354.69 [INFORMATION SUPPLIED BY DISTRICT.]
Each school district covered by the provisions of this
chapter and the community collegeMinnesota state colleges and
state university systemsuniversities system shall furnish to
the teachers retirement association all information and reports
deemed necessary by the executive director to administer the
provisions of section 354.66.
Sec. 24. Minnesota Statutes 2000, section 356.24,
subdivision 1, is amended to read:
Subdivision 1. [RESTRICTION; EXCEPTIONS.] It is unlawful
for a school district or other governmental subdivision or state
agency to levy taxes for, or contribute public funds to a
supplemental pension or deferred compensation plan that is
established, maintained, and operated in addition to a primary
pension program for the benefit of the governmental subdivision
employees other than:
(1) to a supplemental pension plan that was established,
maintained, and operated before May 6, 1971;
(2) to a plan that provides solely for group health,
hospital, disability, or death benefits;
(3) to the individual retirement account plan established
by chapter 354B;
(4) to a plan that provides solely for severance pay under
section 465.72 to a retiring or terminating employee;
(5) for employees other than personnel employed by the
state university board or the community college board andcovered by the board of trustees of the Minnesota state colleges
and universities and covered under the higher education
supplemental retirement plan under chapter 354C, if provided for
in a personnel policy of the public employer or in the
collective bargaining agreement between the public employer and
the exclusive representative of public employees in an
appropriate unit, in an amount matching employee contributions
on a dollar for dollar basis, but not to exceed an employer
contribution of $2,000 a year per employee;
(i) to the state of Minnesota deferred compensation plan
under section 352.96; or
(ii) in payment of the applicable portion of the
contribution made to any investment eligible under section
403(b) of the Internal Revenue Code, if the employing unit has
complied with any applicable pension plan provisions of the
Internal Revenue Code with respect to the tax-sheltered annuity
program during the preceding calendar year; or
(6) for personnel employed by the state university board orthe community college board of trustees of the Minnesota statecolleges and universities and not covered by clause (5), to the
supplemental retirement plan under chapter 354C, if provided for
in a personnel policy or in the collective bargaining agreement
of the public employer with the exclusive representative of the
covered employees in an appropriate unit, in an amount matching
employee contributions on a dollar for dollar basis, but not to
exceed an employer contribution of $2,700 a year for each
employee.
Sec. 25. Laws 1986, chapter 398, article 1, section 18, as
amended by Laws 1987, chapter 292, section 37; Laws 1989,
chapter 350, article 16, section 8; Laws 1990, chapter 525,
section 1; Laws 1991, chapter 208, section 2; Laws 1993, First
Special Session chapter 2, article 6, section 2; Laws 1995,
chapter 212, article 2, section 11; Laws 1997, chapter 183,
article 3, section 29; Laws 1998, chapter 395, section 7; Laws
1998, chapter 402, section 6; and Laws 1999, chapter 214,
article 2, section 19, is amended to read:
Sec. 18. [REPEALER.]
Sections 1 to 17 and Minnesota Statutes, section 336.9-501,
subsections (6) and (7), and sections 583.284, 583.285, 583.286,
and 583.305, are repealed on July 1June 30, 20012005.
Sec. 26. [DEVELOPMENTAL EDUCATION DEMONSTRATION PROJECT.]
Subdivision 1. [COLLEGE AND UNIVERSITY READINESS.] Priorto July 1, 2001, the chancellor, in consultation with thecommissioner of children, families, and learning and selectedschool boards, must designate at least one state college oruniversity and a minimum of four school districts to implement acomprehensive demonstration project designed to increase thenumber of high school graduates who are academically prepared toenroll in college level courses.Subd. 2. [IMPLEMENTATION.] Beginning in the 2001-2002academic year, the designated institution must administercollege readiness assessment tests in math, reading, and writingto all students in the designated school districts, in the firstquarter of the student's junior year of high school. The schooldistrict must inform each student of any academic areas in whichthe student needs additional preparation during high school toensure college readiness.Subd. 3. [STUDENT FOLLOW-UP.] The designated college oruniversity must monitor and report on the college enrollment andcollege placement of all graduating students participating inthe demonstration project. The report must identify any changesin college readiness between initial and final assessment ofstudents involved in the demonstration project.Subd. 4. [REPORT AND RECOMMENDATIONS.] By December 15,2003, the designated college or university must report to theboard of trustees, the commissioner of children, families, andlearning and the committees of the legislature havingjurisdiction over higher education on the effectiveness of thecollege readiness demonstration project, including the estimatedcost of the demonstration project and recommendations for futureremediation efforts.
Sec. 27. [LAWRENCE HALL REMODELING.]
The board of trustees of Minnesota state colleges anduniversities may use funds from nonstate sources to remodel thetop floor of Lawrence Hall for student housing.
Sec. 28. [COMMISSION ON UNIVERSITY OF MINNESOTA
EXCELLENCE.]
Subdivision 1. [ESTABLISHMENT.] The commission onUniversity of Minnesota excellence is established to:(1) review the university's current nationally ranked areasof excellence;(2) review major investment efforts in interdisciplinaryinitiatives identified by the university in 1998, includingdigital technology, design, new media, molecular and cellularbiology, medical science, and agriculture;(3) evaluate and make recommendations on how the universitycan develop additional centers of excellence that will achieve anational ranking in the top ten within the next ten years andidentify centers of excellence which are best positioned andhave the best potential to achieve this goal;(4) examine the university's mission, scope, and financingof programs and propose possible ways in which the universitycan refocus or refine its mission and offerings; and(5) identify undergraduate degree programs in which qualityand productivity improvements could be achieved throughincreased collaboration with public and private post-secondaryinstitutions in and outside of Minnesota.Subd. 2. [MEMBERSHIP; STAFF.] (a) The commission onUniversity of Minnesota excellence consists of 15 members. Fourmembers must be appointed by the governor, including the chairof the commission. Four members must be appointed by thespeaker of the house of representatives. Up to two members ofthe house of representatives may be appointed. Four membersmust be appointed by the subcommittee on committees of thesenate committee on rules and administration. Up to twosenators may be appointed. Three members must be appointed bythe chair of the University of Minnesota board of regents andmay include current members of the board. Appointments must bemade by September 1, 2001. Members appointed to the commissionmust be selected for their expertise in complex organizationalstructure and should include leaders of business, industry, orpost-secondary institutions. The president of the University ofMinnesota or the president's designee is an ex officio,nonvoting member of the commission.(b) Members of the commission serve without compensation orexpenses under Minnesota Statutes, section 15.0575, subdivision3.(c) The board of regents of the University of Minnesota isrequested to make University of Minnesota staff available to thecommission.Subd. 3. [CENTERS OF EXCELLENCE.] The commission must, ata minimum, identify five additional centers of excellence at theUniversity of Minnesota in which to focus resources and policyinitiatives. The goal for these centers is to have them developnational stature and achieve a national ranking in the top tenwithin ten years. The additional centers of excellence must bechosen from a group of potential centers of excellence thatincludes the programs and departments in which the university iscurrently considered a national or regional leader and fromexisting or potential interdisciplinary initiatives at theuniversity.Subd. 4. [REPORT.] The commission must report to thelegislature by July 1, 2002, on areas of excellence, mission,and focus of the University of Minnesota. In preparing itsreport on areas of excellence, the task force is encouraged toconsider operation and capital financing needs, Minnesotaeconomic needs, federal research priorities, and opportunitiesfor private financial support.Subd. 5. [EXPIRATION.] The commission on University ofMinnesota excellence expires on December 31, 2002.
Sec. 29. [REPEALER.]
(a) Minnesota Statutes 2000, sections 135A.06, subdivision1; and 136F.13, subdivision 2, are repealed.(b) Laws 1994, chapter 643, section 66, is repealed.
Sec. 30. [EFFECTIVE DATES.]
(a) Section 10 is effective July 1, 2002.(b) Section 25 is effective the day following finalenactment.
ARTICLE 3
MINNESOTA COLLEGE SAVINGS PLAN
Section 1. Minnesota Statutes 2000, section 13.322,
subdivision 3, is amended to read:
Subd. 3. [HIGHER EDUCATION SERVICES OFFICE.] (a)
[GENERAL.] Data sharing involving the higher education services
office and other institutions is governed by section 136A.05.
(b) [STUDENT FINANCIAL AID.] Data collected and used by the
higher education services office on applicants for financial
assistance are classified under section 136A.162.
(c) [MINNESOTA COLLEGE SAVINGS PLAN DATA.] Account ownerdata, account data, and data on beneficiaries of accounts underthe Minnesota college savings plan are classified under section136A.243, subdivision 10.(d) [SCHOOL FINANCIAL RECORDS.] Financial records submitted
by schools registering with the higher education services office
are classified under section 136A.64.
Sec. 2. Minnesota Statutes 2000, section 136A.241, is
amended to read:
136A.241 [EDVEST PROGRAMMINNESOTA COLLEGE SAVINGS PLAN
ESTABLISHED.]
An Edvest savings programA college savings plan known asthe Minnesota college savings plan is established. In
establishing this programplan, the legislature seeks to
encourage individuals to save for post-secondary education by:
(1) providing a qualified state tuition programplan under
federal tax law;
(2) providing matching grants for contributions to the
program by low- and middle-income families; and
(3) by encouraging individuals, foundations, and businesses
to provide additional grants to participating students.
Sec. 3. Minnesota Statutes 2000, section 136A.242, is
amended to read:
136A.242 [DEFINITIONS.]
Subdivision 1. [GENERAL.] For purposes of sections
136A.241 to 136A.245136A.246, the following terms have the
meanings given.
Subd. 1a. [ACCOUNT.] "Account" means the formal record oftransactions relating to a Minnesota college savings planbeneficiary.Subd. 1b. [ACCOUNT OWNER.] "Account owner" means a personwho enters into a participation agreement and is entitled toselect or change the beneficiary of an account or to receivedistributions from the account for other than payment ofqualified higher education expenses.
Subd. 2. [ADJUSTED GROSS INCOME.] "Adjusted gross income"
means adjusted gross income as defined in section 62 of the
Internal Revenue Code.
Subd. 3. [BENEFICIARY.] "Beneficiary" means the designated
beneficiary for the account, as defined in section 529(e)(1) of
the Internal Revenue Code.
Subd. 4. [BOARD.] "Board" means the state board of
investment.
Subd. 4a. [CONTINGENT ACCOUNT OWNER.] "Contingent accountowner" means the individual designated as the account owner,either in the participation agreement or pursuant to a separateMinnesota college savings plan form, in the event of the deathof the account owner.Subd. 4b. [CONTRIBUTION.] "Contribution" means a paymentdirectly allocated to an account for the benefit of abeneficiary. For a rollover distribution, only the portion ofthe rollover amount that constitutes investment in the accountis treated as a contribution to the account.
Subd. 5. [DIRECTOR.] "Director" means the director of the
higher education services office.
Subd. 5a. [DISTRIBUTION.] "Distribution" means adisbursement from an account to the account owner, thebeneficiary, or the beneficiary's estate or to an eligibleeducational institution. Distribution does not include a changeof beneficiary to a member of the family of the priorbeneficiary or a rollover distribution.Subd. 5b. [DORMANT ACCOUNT.] "Dormant account" means anaccount that has not received contributions for at least threeconsecutive years and the account statements mailed to theaccount owner have been returned as undeliverable.Subd. 5c. [EARNINGS.] "Earnings" means the total accountbalance minus the investment in the account.Subd. 5d. [ELIGIBLE EDUCATIONAL INSTITUTION.] "Eligibleeducational institution" means an institution as defined insection 529(e)(5) of the Internal Revenue Code.Subd. 5e. [INACTIVE ACCOUNT WITH A MATCHING GRANT
ACCOUNT.] "Inactive account with a matching grant account" meansan account in which the beneficiary:(1) is not the account owner, the beneficiary has reached28 years of age, and the beneficiary has not informed the planadministrator that the beneficiary is enrolled in an eligibleeducational institution;(2) is the account owner, the beneficiary was over the ageof 18 when the account was opened, and the beneficiary has notinformed the program administrator that the beneficiary isenrolled in an eligible educational institution within ten yearsof the date of opening the account; or(3) is the account owner, the beneficiary was a minor whenthe account was opened, the account becomes inactive when thebeneficiary turns 28 years of age, and the beneficiary has notinformed the program administrator that the beneficiary isenrolled in an eligible educational institution.
Subd. 6. [EXECUTIVE DIRECTOR.] "Executive director" means
the executive director of the state board of investment.
Subd. 7. [INTERNAL REVENUE CODE.] "Internal Revenue Code"
means the Internal Revenue Code of 1986, as amended.
Subd. 7a. [INVESTMENT IN THE ACCOUNT.] "Investment in theaccount" means the sum of all contributions made to an accountby a particular date minus the aggregate amount of contributionsincluded in distributions or rollover distributions, if any,made from the account as of that date.Subd. 7b. [MATCHING GRANT.] "Matching grant" means anamount added to a matching grant account under section 136A.245.Subd. 7c. [MATCHING GRANT ACCOUNT.] "Matching grantaccount" means an account owned by the state that containsmatching grants and earnings.Subd. 7d. [MAXIMUM ACCOUNT BALANCE LIMIT.] "Maximumaccount balance limit" means the amount established by theoffice under section 136.2441, subdivision 8, paragraph (d).Subd. 7e. [MEMBER OF THE FAMILY.] "Member of the family"means an individual who is related to the beneficiary as definedin section 529(e)(2) of the Internal Revenue Code.Subd. 7f. [NONQUALIFIED DISTRIBUTION.] "Nonqualifieddistribution" means a distribution made from an account otherthan (1) a qualified distribution; or (2) a distribution due tothe death or disability of, or scholarship to, a beneficiary.
Subd. 8. [OFFICE.] "Office" means the higher education
services office.
Subd. 8a. [PARTICIPATION AGREEMENT.] "Participationagreement" means an agreement to participate in the Minnesotacollege savings plan between an account owner and the state,through its agencies, the office, and the board.Subd. 8b. [PENALTY.] "Penalty" means the amountestablished by the office that is applied against the earningsportion of a nonqualified distribution. The amount establishedby the office must be the minimum required to be de minimisunder section 529 of the Internal Revenue Code. The office mustimpose, collect, and apply penalties consistent with section 529of the Internal Revenue Code.Subd. 8c. [PERSON.] "Person" means an individual, trust,estate, partnership, association, company, corporation, or thestate.
Subd. 9. [PROGRAMPLAN.] "Program" or "EdvestPlan"
refers to the programplan established under sections 136A.241
to 136A.245136A.246.
Subd. 10. [PLAN ADMINISTRATOR.] "Plan administrator" meansthe person selected by the office and the board to administerthe daily operations of the Minnesota college savings plan andto provide marketing, recordkeeping, investment management, andother services for the program.Subd. 11. [QUALIFIED DISTRIBUTION.] "Qualifieddistribution" means a distribution made from an account forqualified higher education expenses of the beneficiary.Subd. 12. [QUALIFIED HIGHER EDUCATION
EXPENSES.] "Qualified higher education expenses" means expensesas defined in section 529(e)(3) of the Internal Revenue Code.Subd. 13. [ROLLOVER DISTRIBUTION.] "Rollover distribution"means a transfer of funds made:(1) from one account to another account within 60 days of adistribution;(2) from another qualified state tuition program to anaccount within 60 days of the distribution; or(3) to another qualified state tuition program from anaccount within 60 days of a distribution.Each transfer of funds must be made for the benefit of anew beneficiary who is a member of the family of the priorbeneficiary.Subd. 14. [SCHOLARSHIP.] "Scholarship" means ascholarship, allowance, or payment under section 529(b)(3)(C) ofthe Internal Revenue Code.Subd. 15. [STATE.] "State" means the state of Minnesotaand any Minnesota agency or political subdivision of Minnesota.Subd. 16. [TOTAL ACCOUNT BALANCE.] "Total account balance"means the amount in an account on a particular date or the fairmarket value of an account on a particular date.
Sec. 4. Minnesota Statutes 2000, section 136A.243,
subdivision 1, is amended to read:
Subdivision 1. [RESPONSIBILITIES.] (a) The director shall
establish the rules, terms, and conditions for the programplan,
subject to the requirements of sections 136A.241 to
136A.245136A.246.
(b) The director shall prescribe the application forms,
procedures, and other requirements that apply to the programplan.
Sec. 5. Minnesota Statutes 2000, section 136A.243,
subdivision 2, is amended to read:
Subd. 2. [ACCOUNTS-TYPE PROGRAMPLAN.] The office must
establish the programplan and the programplan must be operated
as an accounts-type programplan that permits individualspersons to save for qualified higher education costsexpenses
incurred at any eligible educational institution, regardless of
whether it is private or public or whether it is located within
or outside of thisthe state. A separate account must be
maintained for each beneficiary for whom contributions are made.
Sec. 6. Minnesota Statutes 2000, section 136A.243,
subdivision 3, is amended to read:
Subd. 3. [CONSULTATION WITH STATE BOARD OF INVESTMENT.] In
designing and establishing the program'splan's requirements and
in negotiating or entering into contracts with third parties
under subdivision 8, the director shall consult with the
executive director. The director and the executive directorshall establish an annual fee, equal to a percentage of theaverage daily net assets of the plan, to be imposed onparticipants to recover the costs of administration,recordkeeping, and investment management as provided insubdivision 9 and section 136A.244, subdivision 4.
Sec. 7. Minnesota Statutes 2000, section 136A.243,
subdivision 4, is amended to read:
Subd. 4. [PROGRAMPLAN TO COMPLY WITH FEDERAL LAW.] The
director shall take steps to ensure that the programplan meets
the requirements for a qualified state tuition program under
section 529(b)(1)(A)(ii) of the Internal Revenue Code. The
director may request a private letter ruling or rulings from the
Internal Revenue Service or take any other steps to ensure that
the programplan qualifies under section 529 of the Internal
Revenue Code or other relevant provisions of federal law.
Sec. 8. Minnesota Statutes 2000, section 136A.243,
subdivision 9, is amended to read:
Subd. 9. [AUTHORITY TO IMPOSE FEES.] The office may impose
annual fees, as provided in subdivision 3, on participants in
the programplan to recover the costs of administration. The
office must use its best efforts to keep these fees as low as
possible, consistent with efficient administration, so that the
returns on savings invested in the programplan will be as high
as possible.
Sec. 9. Minnesota Statutes 2000, section 136A.243, is
amended by adding a subdivision to read:
Subd. 10. [DATA.] Account owner data, account data, anddata on beneficiaries of accounts are private data onindividuals as defined in section 13.02, except that the namesand addresses of the beneficiaries of accounts that receivematching grants are public.
Sec. 10. Minnesota Statutes 2000, section 136A.244,
subdivision 1, is amended to read:
Subdivision 1. [STATE BOARD TO INVEST.] The state board of
investment shall invest the money deposited in accounts in the
programplan and all investments are directed by the board.Neither persons making contributions to an account norbeneficiaries may direct the investment of contributions to theplan or plan earnings.
Sec. 11. Minnesota Statutes 2000, section 136A.244,
subdivision 4, is amended to read:
Subd. 4. [FEES.] The board may impose annual fees, asprovided in section 136A.243, subdivision 3, on participants in
the programplan to recover the cost of investment management
and related tasks for the programplan. The board must use its
best efforts to keep these fees as low as possible, consistent
with high quality investment management, so that the returns on
savings invested in the programplan will be as high as possible.
Sec. 12. [136A.2441] [MINNESOTA COLLEGE SAVINGS PLAN
ACCOUNTS; GENERALLY.]
Subdivision 1. [CONTRIBUTIONS TO AN ACCOUNT.] A person maymake contributions to an account on behalf of a beneficiary.Contributions to an account made by persons other than theaccount owner become the property of the account owner. Aperson does not acquire an interest in an account by makingcontributions to an account. Contributions to an account mustbe made by check, money order, or other commercially acceptablemeans as permitted by the United States Internal Revenue Serviceand authorized by the plan administrator in cooperation with theoffice and the board.Subd. 2. [AUTHORITY OF ACCOUNT OWNER.] An account owner isthe only person entitled to:(1) select or change a beneficiary or a contingent accountowner; or(2) request distributions or rollover distributions from anaccount.Subd. 3. [SECURITY FOR LOANS.] An interest in an accountor matching grant account must not be used as security for aloan.Subd. 4. [SEPARATE ACCOUNTING.] The plan must provide aseparate account for each beneficiary for whom contributions aremade. Each account must have a single account owner and asingle beneficiary. An account owner must not open more thanone account for the same beneficiary, but several account ownersmay open accounts for the same beneficiary.Subd. 5. [NAMING OF BENEFICIARY.] The account owner mustdesignate the beneficiary of an account when the account isestablished, except for accounts established under section529(e)(1)(C) of the Internal Revenue Code, which do not requirea designated beneficiary until a distribution is made.Subd. 6. [CHANGE OF BENEFICIARY.] An account owner maychange the beneficiary of an account to a member of the familyof the current beneficiary, at any time without penalty, if thechange will not cause the total account balance of all accountsheld for the new beneficiary to exceed the maximum accountbalance limit as provided in subdivision 8. A change ofbeneficiary other than as permitted in this subdivision istreated as a nonqualified distribution under section 136A.246,subdivision 3.Subd. 7. [CHANGE OF ACCOUNT OWNERSHIP.] An account ownermay transfer ownership of an account to another person eligibleto be an account owner. All transfers of ownership are absoluteand irrevocable.Subd. 8. [MAXIMUM ACCOUNT BALANCE LIMIT.] (a) When acontribution is made, the total account balance of all accountsheld for the same beneficiary, including matching grantaccounts, must not exceed the maximum account balance limit asdetermined under this subdivision.(b) The maximum account balance limit is reduced forwithdrawals from any account for the same beneficiary that arequalified distributions, distributions due to the death ordisability of the beneficiary, or distributions due to thebeneficiary receiving a scholarship. Subsequent contributionsmust not be made to replenish an account if the contributionresults in the total account balance of all accounts held forthe beneficiary to exceed the reduced maximum account balancelimit. Any subsequent contributions must be rejected. Asubsequent contribution accepted in error must be returned tothe account owner plus any earnings on the contribution less anyapplicable penalties.(c) The maximum account balance limit is not reduced for anonqualified distribution or a rollover distribution. When suchdistributions are taken, subsequent contributions may be made toreplenish an account up to the maximum account balance limit.(d) The office must establish a maximum account balancelimit. The maximum account balance limit is four times the costof one year of qualified higher education expenses at the mostexpensive eligible educational institution in Minnesota. Theoffice must adjust the maximum account balance limit, asnecessary, or on January 1 of each year. Qualified highereducation expenses for the academic year prior to January 1 ofeach year must be used in calculating the maximum accountbalance limit. The maximum account balance limit must notexceed the amount permitted for the plan to qualify as aqualified state tuition program under section 529 of theInternal Revenue Code.(e) If the total account balance of all accounts held for asingle beneficiary reaches the maximum account balance limitprior to the end of that calendar year, the beneficiary mayreceive an applicable matching grant for that calendar year.Subd. 9. [EXCESS CONTRIBUTIONS AND BALANCES.] Acontribution to any account for a beneficiary must be rejectedif the contribution would cause the total account balance of allaccounts held for the same beneficiary, including the matchinggrant account, to exceed the maximum account balance limit undersection 529 of the Internal Revenue Code as established by theoffice. If a contribution under this subdivision is accepted inerror, the contribution must be returned to the account ownerplus any earnings thereon, less applicable penalties. A paymentof an excess contribution to the account owner may be anonqualified distribution subject to a penalty.Subd. 10. [DORMANT ACCOUNTS.] (a) The plan administratorshall attempt to locate the account owner or the beneficiary, orboth, to determine the disposition of a dormant account. A feeof five percent of the total account balance of the dormantaccount, not to exceed $100, plus allowable costs, may becharged for this service. Costs will not exceed $100 or fivepercent of the total account balance in the dormant account,whichever is less.(b) If the account owner, or the account owner's legalheirs, are not found after three attempts by the planadministrator, the remaining funds in the dormant account mustbe turned over to the office. The funds are treated asunclaimed property for purposes of sections 345.31 to 345.60,and the office shall turn all remaining dormant account fundsover to the commissioner of commerce. If the dormant accounthas a matching grant account, all amounts in the beneficiary'smatching grant account, if any, must be returned to the office.Subd. 11. [EFFECT OF PLAN CHANGES ON PARTICIPATION
AGREEMENT.] Amendments to sections 136A.241 to 136A.246automatically amend the participation agreement. Any amendmentsto the operating procedures and policies of the plan shall amendthe participation agreement 30 days after adoption by the officeor the board.Subd. 12. [SPECIAL ACCOUNT TO HOLD PLAN ASSETS IN
TRUST.] All assets of the plan, including contributions toaccounts and matching grant accounts and earnings, are held intrust for the exclusive benefit of account owners andbeneficiaries. Assets must be held in a separate account in thestate treasury to be known as the Minnesota college savings planaccount. Plan assets are not subject to claims by creditors ofthe state, are not part of the general fund, and are not subjectto appropriation by the state. Payments from the Minnesotacollege savings plan account shall be made under sections136A.241 to 136A.246.
Sec. 13. Minnesota Statutes 2000, section 136A.245,
subdivision 2, is amended to read:
Subd. 2. [FAMILY INCOME.] (a) For purposes of this
section, "family income" means:
(1) if the beneficiary is under age 25, the combined
adjusted gross income of the beneficiary's parents or legalguardians as reported on the federal tax return or returns for
the most recently available tax year. If the beneficiary'sparents are divorced, the income of the parent claiming thebeneficiary as a dependent on the federal individual income taxreturn and the income of that parent's spouse, if any, is usedto determine family income; or
(2) if the beneficiary is age 25 or older, the combined
adjusted gross income of the beneficiary and spouse, if any.
(b) For a parent or legal guardian of beneficiaries underage 25 and for beneficiaries age 25 or older who resided inMinnesota and filed a federal individual income tax return twoyears prior to the year in which the matching grant is awarded,the matching grant must be based on family income from InternalRevenue Service tax data on file with the Minnesota departmentof revenue.(c) Parents or legal guardians of beneficiaries under age25 and beneficiaries age 25 or older who did not reside inMinnesota two years prior to the year in which the matchinggrant is awarded must provide a signed copy of their federalindividual income tax return to the office, regardless of whothe account owner is, in order to be considered for a matchinggrant.
Sec. 14. Minnesota Statutes 2000, section 136A.245, is
amended by adding a subdivision to read:
Subd. 2a. [RESIDENCY REQUIREMENT.] (a) If the beneficiaryis under age 25, the beneficiary's parents or legal guardiansmust be Minnesota residents to qualify for a matching grant. Ifthe beneficiary is age 25 or older, the beneficiary must be aMinnesota resident to qualify for a matching grant.(b) To meet the residency requirements, the parent or legalguardian of beneficiaries under age 25 must have filed aMinnesota individual income tax return as a Minnesota resident,claiming the beneficiary as a dependent, two years prior to theyear in which the matching grant is awarded. For beneficiariesage 25 or older, the beneficiary, and a spouse, if any, musthave filed a Minnesota individual income tax return as aMinnesota resident two years prior to the year in which thematching grant is awarded.(c) A parent of beneficiaries under age 25 andbeneficiaries age 25 or older who did not reside in Minnesotatwo years prior to the year in which the matching grant isawarded must establish Minnesota residency through the issuanceof a Minnesota driver's license or identification card.
Sec. 15. Minnesota Statutes 2000, section 136A.245, is
amended by adding a subdivision to read:
Subd. 2b. [AGE AND DATE OF BIRTH DETERMINATION OF
BENEFICIARY.] In determining the age of the beneficiary forpurposes of a matching grant, the plan administrator shall usethe age of the beneficiary as reported on the participationagreement on December 31 of the year in which the request for amatching grant is made.
Sec. 16. Minnesota Statutes 2000, section 136A.245,
subdivision 4, is amended to read:
Subd. 4. [BUDGET LIMIT.] If the total amount of matching
grants determined under subdivision 3 exceeds the amount of the
appropriation for the fiscal year, the director shall
proportionately reduce each grant so that the total equals the
available appropriation. The director must reduce matchinggrants so that the amount of the matching grant assigned to abeneficiary's account equals:(1) the ratio of state appropriations for the matchinggrant divided by the total dollar amount of matching grants forall beneficiaries; multiplied by(2) the dollar amount of the matching grant for eacheligible beneficiary.
Sec. 17. Minnesota Statutes 2000, section 136A.245, is
amended by adding a subdivision to read:
Subd. 7. [ANNUAL APPLICATION.] An account owner mustsubmit an application form for a matching grant on an annualbasis. The application must be postmarked by December 31 of theyear preceding the awarding of the matching grant.
Sec. 18. Minnesota Statutes 2000, section 136A.245, is
amended by adding a subdivision to read:
Subd. 8. [SINGLE BENEFICIARIES WITH MULTIPLE
ACCOUNTS.] (a) A matching grant will first be computed on anaccount owned by a parent or legal guardian of the beneficiary,or an account owner who is also the beneficiary. If there aremultiple accounts for a single beneficiary, any matching grant,up to the annual maximum, will be proportionately awarded to thebeneficiary named in accounts owned by the parents or guardians.(b) If the account owned by a parent or a guardian or anaccount owner who is also the beneficiary does not qualify forthe maximum annual matching grant, any remaining matching grantfunds are proportionately distributed to the beneficiary to anaccount or accounts owned by someone other than the parent orguardian.(c) If the account for a beneficiary is not owned by aparent or a legal guardian, or an account owner who is also thebeneficiary, then the matching grant will be proportionatelydistributed to the beneficiary to accounts owned by others.
Sec. 19. Minnesota Statutes 2000, section 136A.245, is
amended by adding a subdivision to read:
Subd. 9. [OWNERSHIP OF MATCHING GRANT FUNDS.] The stateretains ownership of all matching grants and earnings onmatching grants until a qualified distribution is made to abeneficiary or an eligible educational institution.
Sec. 20. Minnesota Statutes 2000, section 136A.245, is
amended by adding a subdivision to read:
Subd. 10. [INACTIVE ACCOUNTS WITH MATCHING GRANTS.] (a)The plan administrator will attempt to locate the account owneror the beneficiary of an inactive account with a matching grantto determine the disposition of the account. No fee will becharged for this service. The matching grants and matchinggrant earnings in the account must be returned to the office,unless the account owner applies for a deferment or thebeneficiary begins attending an eligible educational institutionwithin one year of the date of notification.(b) The account owner may apply to the plan administratorfor a deferment of inactive account time limits. Uponapplication, the plan administrator shall grant a one-timedeferment of two years. In addition, the plan administratorshall grant a deferment for the beneficiary's initial enlistmentfor active duty in the armed forces of the United States, or forthe period of active military duty required as part of thebeneficiary's obligation as a member in a reserve military unitof the armed forces of the United States.
Sec. 21. Minnesota Statutes 2000, section 136A.245, is
amended by adding a subdivision to read:
Subd. 11. [FORFEITURE OF MATCHING GRANTS.] (a) Matchinggrants are forfeited if:(1) the account owner transfers the total account balanceof an account to another account or to another qualified statetuition program;(2) the beneficiary receives a full tuition scholarship oradmission to a United States service academy;(3) the beneficiary dies or becomes disabled;(4) the account owner changes the beneficiary of theaccount; or(5) the account owner closes the account with anonqualified withdrawal.(b) Matching grants must be proportionally forfeited if:(1) the account owner transfers a portion of an account toanother account or to another qualified state tuition program;(2) the beneficiary receives a scholarship covering aportion of qualified higher education expenses; or(3) the account owner makes a partial nonqualifiedwithdrawal.(c) If the account owner makes a misrepresentation in aparticipation agreement or an application for a matching grantthat results in a matching grant, the matching grant associatedwith the misrepresentation is forfeited. The office and theboard must instruct the plan administrator as to the amount tobe forfeited from the matching grant account. The office andthe board must withdraw the matching grant or the proportion ofthe matching grant that is related to the misrepresentation.
Sec. 22. [136A.246] [ACCOUNT DISTRIBUTIONS.]
Subdivision 1. [QUALIFIED DISTRIBUTION METHODS.] (a)Qualified distributions may be made:(1) directly to participating eligible educationalinstitutions on behalf of the beneficiary;(2) in the form of a check payable to both the beneficiaryand the eligible educational institution; or(3) to an account owner with a receipt verifying thepayment of qualified higher education expenses.(b) When administratively feasible, distributions may bemade when the account owner and beneficiary certify prior to thedistribution that the distribution will be expended forqualified higher education expenses a reasonable time after thedistribution. The plan administrator may retain a penalty onthe earnings portion of the nonqualified distribution untilpayment of qualified higher education expenses aresubstantiated. A payment receipt showing payment for qualifiedhigher education expenses must be submitted to the programadministrator within 30 days of distribution.(c) Qualified distributions must be withdrawnproportionally from contributions and earnings in an accountowner's account on the date of distribution as provided insection 529 of the Internal Revenue Code.Subd. 2. [MATCHING GRANT ACCOUNTS.] Qualifieddistributions are based on the total account balances in anaccount owner's account and matching grant account, if any, onthe date of distribution. Qualified distributions must bewithdrawn proportionally from each account based on the relativetotal account balance of each account to the total accountbalance for both accounts. Amounts for matching grants andmatching grant earnings must only be distributed for qualifiedhigher education expenses.Subd. 3. [NONQUALIFIED DISTRIBUTION.] An account owner mayrequest a nonqualified distribution from an account at anytime. Nonqualified distributions are based on the total accountbalances in an account owner's account and must be withdrawnproportionally from contributions and earnings as provided insection 529 of the Internal Revenue Code. The earnings portionof a nonqualified distribution is subject to a penalty. Forpurposes of this subdivision, "earnings portion" means the ratioof the earnings in the account to the total account balance,immediately prior to the distribution, multiplied by thedistribution. The penalty must be withheld from the totalamount of any distribution.Subd. 4. [NONQUALIFIED DISTRIBUTIONS FROM MATCHING GRANT
ACCOUNTS.] (a) If an account owner requests a nonqualifieddistribution from an account that has a matching grant account,the total account balance of the matching grant account, if any,is reduced.(b) After the nonqualified distribution is withdrawn fromthe account including any penalty as provided in subdivision 3,the account owner forfeits matching grant amounts in the sameproportion as the nonqualified distribution is to the totalaccount balance of the account.Subd. 5. [DISTRIBUTIONS DUE TO DEATH OR DISABILITY OF, OR
SCHOLARSHIP TO, A BENEFICIARY.] An account owner may request adistribution due to the death or disability of, or scholarshipto, a beneficiary from an account by submitting a completedrequest to the plan. Prior to distribution, the account ownershall certify the reason for the distribution and providewritten confirmation from a third party that the beneficiary hasdied, become disabled, or received a scholarship for attendanceat an eligible educational institution. The plan must notconsider a request to make a distribution until a third-partywritten confirmation is received by the plan. For purposes ofthis subdivision, a third-party written confirmation consists ofthe following:(1) for death of the beneficiary, a certified copy of thebeneficiary's death certificate;(2) for disability of the beneficiary, a certification by aphysician who is a doctor of medicine or osteopathy stating thatthe doctor is legally authorized to practice in a state of theUnited States and that the beneficiary is unable to attend anyeligible educational institution because of an injury or illnessthat is expected to continue indefinitely or result in death.Certification must be on a form approved by the plan; or(3) for a scholarship award to the beneficiary, a letterfrom the grantor of the scholarship or from the eligibleeducational institution receiving or administering thescholarship, that identifies the beneficiary by name and socialsecurity number or taxpayer identification number as therecipient of the scholarship and states the amount of thescholarship, the period of time or number of credits or units towhich it applies, the date of the scholarship, and, ifapplicable, the eligible educational institution to which thescholarship is to be applied.
Sec. 23. [REVISOR'S INSTRUCTION.]
(a) The revisor of statutes shall renumber each section ofMinnesota Statutes listed in column A with the section listed incolumn B.Column AColumn B136A.241136G.01136A.242136G.03136A.243136G.05136A.244136G.07136A.2441136G.09136A.245136G.11136A.246136G.13(b) The revisor of statutes shall correct cross-referencesin Minnesota Statutes that are recodified by this act, and, ifMinnesota Statutes, sections 136A.241 to 136A.246, are furtheramended in the 2001 legislative session, shall codify theamendments in a manner consistent with this act.(c) The revisor of statutes shall change "Edvest" to"Minnesota college savings plan" wherever it appears inMinnesota Statutes.
Sec. 24. [EFFECTIVE DATE.]
This article is effective the day following final enactment.
Presented to the governor June 27, 2001
Signed by the governor June 30, 2001, 8:46 p.m.